EY-Global-oil-and-gas-tax-guide-2014

394 Nigeria
statutes under which tenement rates are imposed. The actual collection of the
rates is done by the local authority for the area where the relevant building
is situated. The tenement rate is usually assessed on the rental value of a
building — in Lagos State, for example, the tenement rate is assessed at the
rate of 10% of the rental value of a building.
Signboard and advertisement permits
The rate for a signboard and advertisement permit varies between different
local governments.
Oil and Gas Export Processing Zone
Under the Oil and Gas Export Free Zone Act 2004, any approved enterprise
established within Onne, the Oil and Gas Export Processing Zone, is exempted
from all taxes, levies and rates imposed by the federal, state or local
governments in Nigeria.
Service company taxation
Pursuant to the Companies Income Tax (Amendment) Act 2007, services
companies are taxed at a rate of 30%, in addition to the 2% education tax
assessed on the assessable profit of all Nigerian companies.
A deduction is available for capital allowances, as shown in the table below.
Building (industrial and nonindustrial)
Table I:
Initial
allowances
Table II:
Annual
allowances
15 10
Mining 95 0
Plant: agricultural production 95 0
Others 50 25
Furniture and fittings 25 20
Motor vehicles: public
transportation
95 0
Others 50 25
Plantation equipment 95 0
Housing estate 50 25
Ranching and plantation 30 50
Research and development 95 0
Rate
%
Rate
%
The Petroleum Industry Bill
There is significant uncertainty as to when the Bill will be passed and what is
going to be the content of the Act when passed into law.
Nigerian Oil and Gas Industry Content Act 2010 (NOGIC Act)
The Nigerian Oil and Gas Content Act 2010 (commonly known as the NOGIC
Act) was signed into law on 22 April 2010 and effective from this date. The
NOGIC Act is the legal framework and mechanism for the creation of an
environment aimed at increasing indigenous capacity building. The
implementation of the provisions is to be carried out by the Nigerian Content
Monitoring Board. Every entity awarding a contract in the upstream sector of
the Nigerian oil and gas industry should deduct and remit 1% to the National
Content Development Fund. The 1% mandatory deduction is not applicable to
contractual arrangements executed prior to 22 April 2010 even if ongoing
after that date. The 1% mandatory deduction applies to all contracts of any
nature in the upstream sector and without any minimum limits.